OVERVIEW
Catalyst
Summary
THE SHIFT IN THE UK FOOD RETAIL MARKET
UK consumers are much more price sensitive since 2008
Real wages continue to stagnate in the UK
Unemployment is falling, but has failed to translate to higher productivity or incomes
Changing consumer habits present a window of opportunity
Consumer habits are unlikely to change
Aldi and Lidl have gained at the expense of the big four
Aldi and Lidl deliver cheap products
Discounters have become acceptable to higher income groups
Discounters have sparked deflationary price wars
COMMON INDUSTRY RESPONSES
All players have begun to lower their prices
Brand matching is becoming more common
ASDA may be the only company able to engage in sustained price cutting
Many are funding price cuts by restricting expansion
Improving product range and quality of service
Smaller store formats an advantage against discounters
Aldi is expanding with smaller stores
Online grocery shopping increasing
Aldi is monitoring e-commerce
TESCO RISING?
Tesco financial overview
Tesco entered 2015 embroiled in controversy
Tesco overstated first half profits significantly in 2014
The company has been battling since Philip Clarke's appointment
Tesco continues to divest products and exit markets
Tesco's international ambitions have been thwarted
Tesco's size insulates it from price wars to an extent
Clubcard provides advantage with customer data
Tesco's first quarter results are tentatively positive
Attempting to restore brand image through CSR measures
Tesco criticized for executive pay and supplier practices
A potential rebellion over executive pay failed to materialize
Tesco alleged to flout law with manufacturers
ASDA: GOING FULL WAL-MART
Wal-Mart financial overview
Wal-Mart's size gives ASDA an advantage
ASDA's failure in convenience sector could cost it
ASDA may only seriously compete in smaller sector by acquisition
ASDA's focus is expanding e-commerce
Click-and-collect expansion to cater for growing market
ASDA's online stores are being rationalized
ASDA's diversification
ASDA's expansion into petrol forecourts
Q1 2015 saw ASDA perform the worst of the big four
J SAINSBURY'S: FIGHTING FIRE WITH FIRE
Financial overview
Sainsbury's forced to adapt to price elasticity
Sainsbury's convenience sector is growing strongly
Sainsbury's further expanding ecommerce capabilities
Sainsbury's using established discount brand in Netto
Further diversification into non-food an option
Sainsbury's is further expanding into financial services
Nectar card gives customer data advantage over discounters
Sainsbury's Q1 2016 sales fell for sixth consecutive quarter
W M MORRISONS: INERTIA CREEPS
Financial overview
Morrison's has disadvantaged itself in several ways
Morrison's lack of product diversity leaves it vulnerable
Morrison's delay lost it valuable inroads in the online market
Morrison's has faltered in a bid to close the gap
M local failed to meet expectations
Too little too late for Morrison's digital transformation?
Match & More card specifically targets discounters
Integrated business model allows upstream efficiencies
Q1 provides mixed results for the company
Simplification of offering progressing
CO-OPERATIVE: BACK TO BASICS
Financial overview
The Co-operative is rebuilding following a prolonged crisis
Co-operative bank was bailed in
Co-operative food and the True North strategy
Somerfield acquisition effectively negated
Co-op convenience estate benefitting from changing trends
Financial troubles permitted rivals to gain
True North is addressing price and product range
Prices are cut but smaller size limits options
Co-op excluding itself from supermarkets and online channels
Co-op's diversification has no potential for synergies
WAITROSE: CARVING A NICHE
Financial overview
Waitrose is not immune to discounter threat
Waitrose has price matched, eroding its margins
Online market burgeoning but becoming more competitive
Utilizing John Lewis for click-and-collect to drive traffic
Waitrose has highly loyal customers
Waitrose is further expanding its customer experience
Waitrose entering convenience sector
CONCLUSIONS
Industry disruption bleak for big six
APPENDIX
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